Betting On The Right Horses
Owners of small companies, I have found, worry far too much about their ability to compete with large companies in the hiring of top sales and management personnel. The truth is that there shouldn't be any competition, because small companies should not even consider hiring the kind of people who are attracted to large companies.
Entrepreneurs need employees who are racehorses. We need chargers who can make things happen. We need people who are creative and innovative and who don't know what it means to say something can't be done. It helps if they are workaholics with an excess of nervous energy, and -- even better -- if they never sleep. But, above all, they can't be the kind of people who like to follow "proper procedures," or who value security over the thrill of the chase.
Racehorses are, of course, precisely the kind of employees that drive big companies crazy, and vice versa. Most such people wouldn't be caught dead in a huge, bureaucratic organization. What's more, they don't belong there. I recently attended a seminar where one of the speakers, himself a big-company executive, noted that "large corporations have to establish the necessary controls to ensure no individual be allowed to take any action that may cause injury to the company."
He is absolutely right. Large companies have too much at stake to let a herd of racehorses loose in the fields. They need people who are comfortable with rules, regulations, and corporate manuals; who are willing to take orders and play by the rules; who thrive in a structured environment. I call them "mules."
If you want to destroy a small company, just hire a mule driver to manage a bunch of racehorses. I know. I did it once, and I ruined a great company.
The company was Formula 409 Inc.; the year was 1970. I had put together a team of racehorses who had run a pretty damn good race. We had taken 409 national against incredible odds, and we had beaten the living starch out of Procter & Gamble, Colgate-Palmolive, Bristol-Myers, and a host of other consumer-product giants. Now we were making money hand over fist, enjoying every minute of it. After each success, you could hear a lot of whooping and hollering in our company offices. We partied together as every opportunity and consumed excessive amounts of the fruit of the vine. The company was hot, and we were happy. But I couldn't leave well enough alone. I became a victim of the entrepreneurial disease.
The symptoms of the disease are familiar to every successful entrepreneur. You build a great company, and you start thinking you're the next P&G, or IBM, or General Motors. You can't keep your eyes off the giants with their super organizations and their professional management teams. In my own case, I became so mesmerized by them that I convinced myself to begin a management improvement program for me and the company. I began attending every business seminar that came down the pike. I even enrolled in the Harvard Business School's Advanced Management Program, which turned out to be a wonderfully valuable experience for me, but which did nothing to cure me of my disease. On the contrary, it reinforced my conviction that I needed to change the way I conducted business, to become professional.
So I began hiring consultants to help me improve. One of the consultants was a well-known personnel expert whom I retained to evaluate my sales organization. After traveling around the country interviewing my racehorses, he came back and reported: "Wilson, you are lucky to still be in business. Your sales organization is a disaster. Your salesmen are devoid of discipline and don't know the meaning of professionalism. I recommend that we replace all of them." He also advised me to hire at once a marketing vice-president who would have total authority over all sales and advertising. Convinced as I was of our need to become professional, I agreed, like an ass, to every suggestion.
With the consultant's help, we recruited the marketing vice-president from a Fortune 500 company, at a salary slightly higher than my own, and gave him total responsibility over all my racehorses. After his first sales meeting, he said: "Wilson, I don't know how you did it with that crew of misfits and mavericks." So he and the consultant began replacing the racehorses with big-company mules. I was, of course, unhappy to be losing the people with whom I had worked so well, but I didn't interfere. I believed we needed professional management to continue our growth, and that meant bringing in professional managers. My role was to sit back and delegate and let the professionals do their jobs.
Sure enough, they did. Little by little, my relatively small company ($15 million in sales) began to look, act, and small like a miniature giant. We began to lose our energy, our spontaneity, and our creative spark. Whereas, in the past, we had always prided ourselves on our innovative marketing plans, the new plans were not even interesting, let alone innovative or original. Nor was there any whooping and hollering in the hallways, mainly because there was never anything to whoop and holler about. I also found to my horror that professional managers don't like bourbon or scotch or even beer; they drink martinis (one only) or a glass of wine -- which was OK, I suppose. What was not OK was that Formula 409 began to lose market share.
To listen to the professional managers, all the problems were the fault of our brokerage organization, with which we had previously enjoyed an excellent relationship. Now, however, it was being blamed for everything that went wrong. The brokers, for their part, began calling me and asking, "Wilson, what has happened? Who are these jerks? What in the hell has happened to the 409 people?"
Slowly, the truth began to sink in: we were in serious trouble. Our market position was crumbling. Heaven help us if P&G or Colgate decided to make another run at 409. We no longer had the people or the organization that could respond. What a mess I was in! Right before my eyes, I could see what I had so carefully created going to hell in a hurry. I would have given anything to have my racehorses back and send the mules off where they belonged. But what could I do? Fire the whole bunch? It was too late for that.
Then I got lucky. Clorox Co. picked that propitious moment to offer me $7.5 million cash for Formula 409. I grabbed the money and headed for the bank with a grateful sigh of relief.
Looking back, I regret the mistake I made, but I certainly don't blame the professional managers I hired. They were talented people who simply wound up in the wrong company. All of them went on to do great things. The marketing vice-president became president of a large consumer-product company. Formula 409's product manager became the European manager of a major international advertising agency.The others did almost as well.
No, the blame was all mine, and I learned my lesson: it's a lot more fun to compete with mules than to hire them.